KUALA LUMPUR: The Real Estate and Housing Developers’ Association Malaysia (Rehda) is eagerly anticipating Budget 2025, scheduled to be tabled on October 18, hoping that the government will maintain its support for first-time homebuyers.
Its president, Datuk Ho Hon Sang believes that continued assistance will play a crucial role in stimulating the property market and making homeownership more accessible.
He suggests that first-time homebuyers should enjoy a tax deduction on interest incurred during the construction period or personal tax relief of RM20,000 on property priced up to RM500,000.
"Homebuyers should also be granted a one-off tax relief amounting to RM30,000 for property priced up to RM500,000.
"There should be a rent-to-own scheme for first-time buyers and more banks should actively implement the step-up financing scheme to bridge affordability,” he told Bernama in response to Rehda’s Budget 2025 aspirations.
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Meanwhile, Ho said that the provision of affordable housing is imposed on developers irrespective of demand or supply in the respective locations or states.
He said Rehda has proposed that a task force be established between them and the authorities to study and analyse the actual demand for affordable housing.
This is based on informed data and statistics, considering targeted buyers, locality, number of units and timing, Ho explained.
He also highlighted challenges to reducing the cost of doing business, as payments and contributions made to state authorities in place of constructing low-cost housing are disallowed as a deductible expense under Section 33(1) of the Income Tax Act.
Ho noted that Rehda is proposing that all payments and contributions for exemption from building low-cost housing be allowed as a tax-deductible expense.
Currently, developers are required to provide land for the construction of social amenities, infrastructure (roads, drains, sub-stations) and open spaces as well as financial contributions.
"Purchasers will ultimately bear these costs through an increase in house prices. Hence, we propose that unnecessary charges imposed by authorities be reviewed, as developers are already required to lay the necessary infrastructure in their development projects.
"Reducing the cost of doing business is vital to enable properties to be priced more affordably,” said Ho.
He also hoped that the government would exempt the construction industry from the Human Resource Development Corporation (HRD Corp) levy.
"This is because the industry is already contributing 0.25 per cent of the contract sum to the Construction Industry Development Board (CIDB) for, among others, the training of staff and workers.
"A further one per cent HRD Corp contribution is an additional cost of doing business which brings detrimental impact on property prices,” he said.
On promoting construction revolution 4.0, which is the term used to represent the fourth industrial revolution for the construction industry, Ho said Rehda has proposed that incentives be extended to the entire supply chain.
"This is to ensure the success of this initiative with corporate tax deductions given to companies adopting Industrialised Building System (IBS) and Building Information Modelling (BIM).
"Presently, most incentives for IBS and BIM primarily benefit component suppliers,” Ho said, adding that to accelerate the adoption of IBS, more incentives should be offered.
He proposed incentives such as reducing the income tax rate on taxable income for the sale of IBS projects with an IBS score of over 70 per cent; sales tax exemption on IBS products and services to boost economies of scale and lower IBS cost; and providing a double tax deduction for IBS training costs.
"There should also be a double tax allowance for capital expenditure and the increased portion of construction costs due to IBS system adoption.
"Also, exempt or reduce import duties on IBS machinery, equipment, products and materials; and provide special loan interest for procurement of BIM software and any equipment and machinery for IBS,” said Ho.
In promoting the environmental, social and governance (ESG) agenda, he said Rehda has proposed that the government provide some tax incentives for consumers, developers, owners and operators of green buildings and green property developments.
This includes providing double tax deductions on incremental green costs incurred in the building of green-certified buildings as well as engaging green building-related consultancy services.
"There should also be stamp duty exemption for green properties; as well as grants or subsidies for existing buildings to undertake energy audits, benchmark active systems, and identify appropriate elements for upgrading,” Ho said. - Bernama
